PIB, cheap fuel: Inside Buhari’s plans for oil sector
On the back of the feats recorded in the oil and gas sector last year, such as the amendment of the Deep Offshore (and Inland Basin Production Sharing Contact) Act, signing of the Final Investment Decision (FID) on the Nigeria LNG Train 7 project as well as the discovery of crude oil in the North, President Muhammadu Buhari, who doubles as the Minister of Petroleum Resources, has set the tone for the development of the industry in 2020 and beyond.
Minister of State for Petroleum Resources Chief Timipre Sylva on Thursday in Abuja, in his first official press conference since he was appointed as minister, rolled out priority areas in the sector the Buhari administration will be pursuing from 2020 to 2023.
Sylva told reporters that developing the petroleum industry and improving the relationship between the industry and the ordinary citizen were the two broad mandate of the president for the sector, adding that Buhari was keen to take the industry from where it currently stands to the next level.
He said Nigeria which used to produce 2 million barrels of oil per day (bpd) had targets of increasing production up to at least 3m bpd but has instead gone backwards on the target.
“Today we are producing, according to OPEC quota of 1.774m bpd. So, there’s need for us to move this forward,” Sylva said, adding that making petroleum products more accessible and affordable to the ordinary man was a major concern of the president.
Daily Trust gathered that some of the things the government plans to achieve this year, through the ministry, include the passage of the Petroleum Industry Bill (PIB); curtailing theft of petroleum products and crude oil as well as the incorporation of NNPC and its existing joint venture companies so as to become a responsible commercial enterprise.
Pass PIB by May 2020
Counting on the current harmony between the executive and legislative arms, there is optimism that the Petroleum Industry Governance, Administration and Host Communities Bill and the Petroleum Industry Fiscal Bill will be passed within the first anniversary of this administration.
Sylva said the team working on the PIB was at the final stage of the harmonisation of all the existing versions from 2000 to date (2009, 2012, and 2018) with consideration to the concerns raised by the industry players.
In the Petroleum Industry Governance Bill (PIGB), an aspect of the broader PIB which was passed by the National Assembly last year but denied accent by President Muhammadu Buhari, a single regulator was recommended. But the recommendation did not do down well with key stakeholders in the nation’s oil and gas sector.
This time, Sylva said the federal government was considering two regulators in the PIB, that is at the final stage of the harmonization.
One of the regulators will be for the Upstream (the commission) while the other will be for the Midstream & Downstream (the authority).
The midstream and downstream sectors, according to the minister, will particularly open enormous opportunities to local investors and consequently create massive job opportunities, adding that the government was coming up with more robust fiscal provisions, acreage management and drilling-or-drop programme on the upstream side
N97 per litre fuel for common man
Asked whether government was going to reduce the pump price of Premium Motor Spirit (PMS) otherwise called petrol, the minister said there were plans to provide alternative fuel that is cheaper.
He revealed that plans are underway to provide Compressed Natural Gas (CNG) as fuel for the common man that will cost between N95 to N97.
“What we have decided is that we should try and give the masses an alternative. CNG costs less than the subsidised PMS. Per litre, the subsidised rate of the PMS is N145 per litre but CNG will cost about N95 to N97.”
Marginal field rounds
Countries normally issue oil licenses to grant companies rights to search for oil deposits in what is typically called a licensing round. Awarding oil licenses is necessary for the government to raise revenues, meet production targets and increase oil reserves.
In 2017, the federal government through the Department of Petroleum Resources (DPR) set guidelines for the marginal field bid round, which was scheduled to take place later that year or early 2018. A schedule for the conduct of oil blocks and marginal bid rounds and allocations was drafted and awaiting presidential directives. Hopes that Nigeria would hold licensing round for oil blocks dimmed.
But Sylva said 2020 remained an important year for Nigeria’s proposed marginal field rounds and major bid rounds. In specific terms, he expressed hope that with the anticipated passage of the PIB, there was possibility of conducting bid rounds for marginal oil fields in 2020.
2020, the year of gas
The minister had earlier in the year declared 2020 as the year of gas for the nation.
Nigeria’s current proven gas reserves estimate is about 202 trillion cubic feet (TCF) with potential for up to 600TCF in undiscovered resources. With the undiscovered potential, Nigeria could be in the same league as Iran, Qatar, Saudi Arabia and Russia.
Recognising the potential of our enormous natural gas resources and the unprecedented growth in domestic gas demand, the federal government through the Ministry of Petroleum Resources, has championed various interventions to stimulate gas utilization and monetization.
One of the recent initiatives is the Nigeria Gas Flare Commercialization Program me (NGFCP), approved by the Federal Executive Council in June 2016, as strategy designed to eliminate gas flares.
The federal government had in November, 2018 called for Expression of Interest (EoI) in the NGFCP. The 205 out of 850 companies that emerged successful will be invited to submit their proposal for flare gas utilisation through the Request for Proposals (RfP) phase of the NGFCP.
About US$ 3.5 billion worth of investments is required to achieve the gas flare commercialisation targets by 2020.
Once operational, projects launched under the NCFCP would reduce Nigeria’s emissions by ~13 million tons of CO2 per year, consistent with Nigeria’s commitments to the reduction of Greenhouse Gases under the Paris Climate Change Agreement (which could also be monetized under an emission credits/carbon sale programme at a value range of US$400 - 500million)